This 2018 report provides an assessment of the flexibility and proportionality arrangements available within corporate governance frameworks that relate to seven areas of regulation: pre-emptive rights; board composition, board committees and board member qualifications; say on pay and the detail of disclosure on remuneration; related party transactions; disclosure of periodic financial information and ad-hoc information; major shareholding disclosure, and takeovers. For more information, please visit: https://doi.org/10.1787/9789264307490-en

1. The OECD Reviews on Flexibility
and Proportionality in Corporate
Governance
OECD Corporate Governance Committee

2. Flexibility and proportionality in corporate governance
• Flexibility and proportionality is an inherent part of the
legal framework of most jurisdictions.
• The rationale is to accommodate differences in company
practices, while achieving desired regulatory outcomes.
• And it is by no means a way to weaken the effectiveness
of the corporate governance framework.
• But it can increase efficiency and avoid overregulation.

3. Adapting to a changing financial and corporate landscape
The development of the G20/OECD Principles of Corporate
Governance was informed by a number of special studies
about key developments in both the financial and corporate
sectors.
• The decrease in smaller growth company listings
• Changes in corporate characteristics and business
models
• Increase in institutional ownership
• Changes in business models of stock exchanges

4. The G20/OECD Principles on Flexibility and Proportionality
• Rules should be developed with a view to their impact on
overall economic performance and market integrity.
• They should be flexible enough to meet the needs of
corporations operating in widely different circumstances.
• They should allow for flexibility and proportionality. For
example with respect to:
 size
 ownership and control structure
 geographical presence
 sectors of activity
 the company's stage of development

5. The OECD Reviews on Flexibility and Proportionality in
Corporate Governance
• 7 policy areas, 39 countries:
o Board composition, board
committees and board member
qualifications
o Say on pay and the detail
of disclosure on remuneration
o Related party transactions
o Disclosure of
periodic financial information and
ad-hoc information
o Major shareholding disclosure
o Takeovers
o Pre-emptive rights

6. Criteria that may motivate and allow for flexibility and
proportionality
• The review surveys the following criteria that may
motivate and allow for flexibility and proportionality
with respect to the implementation of corporate
governance rules.
o Size (of equity, sales, revenues etc.)
o Ownership and control structure
o Listing status (venue, cross-listing etc.)
o Maturity of the firm
o Accounting standards
o Legal form

7. Survey results - 1
Number of jurisdictions 10 20 30 39
Board composition ■■■■■■■■■■■■■■■■■■■■■■■■■■■■■■■■■■■■■■■
Related party
transactions
■■■■■■■■■■■■■■■■■■■■■■■■■■■■■■■■■□□□□□□
Disclosure of
information
■■■■■■■■■■■■■■■■■■■■■■■■■■■■■■■■□□□□□□□
Takeovers ■■■■■■■■■■■■■■■■■■■■■■■■■■■■■■■■□□□□□□□
Pre-emptive rights ■■■■■■■■■■■■■■■■■■■■■■■■■■■■■■■□□□□□□□□
Say on pay ■■■■■■■■■■■■■■■■■■■■■■■■■■■■■■■□□□□□□□□
Major
shareholding
disclosure
■■■■■■■■■■■■■■■■■■■■■■■■■■■■■■□□□□□□□□□
Source: OECD (2018), Flexibility and Proportionality in Corporate Governance
• A vast majority of countries have criteria that allow for flexibility and
proportionality at company level in all of the seven areas of regulation.
Number of jurisdictions that reported that they had at least one criterion that
allowed for flexibility and proportionality

8. Survey results - 2
Source: OECD (2018), Flexibility and Proportionality in Corporate Governance
• Company size and the listing status are the most common reasons to
apply flexibility and proportionality
Board
composition
Disclosure of
information
Major
shareholding
disclosure
Pre-
emptive
rights
Related party
transactions
Say on
pay
Takeovers
Accounting standards 0 4 0 0 4 1 0
Maturity of firm 4 2 0 1 3 3 1
Ownership/ control structure 12 4 6 7 10 2 14
Legal form 16 7 5 9 6 9 6
Size 29 17 9 3 11 11 9
Listing/publicly traded 28 27 24 7 21 25 16
Number of jurisdictions that reported the use of flexibility mechanism and their
application across the seven areas regulation

9. Thank you for your attention!
More information about the OECD’s work on corporate governance is available at:
http://www.oecd.org/corporate
The OECD Secretariat welcomes any questions and comments. Please address them to:
Mr. Mats Isaksson
Head of Division
Corporate Governance and Corporate Finance Division
Directorate for Financial and Enterprise Affairs, OECD
[Tel: +33 1 45 24 76 20 | Mats.Isaksson@oecd.org]